Re: Why are we exporting gas and then importing gas at the risk of damage to unique wetlands?

We understand your concerns about potential damage to the unique and environmentally significant area of Western Port.

AGL is not a gas exporter and therefore we aren’t in a place to comment directly about the complex gas market situation we are facing.

Australia is a major exporter of natural gas; however, most of this gas is not available to the south-eastern states. It has been a difficult realisation for many that the abundant gas supplies Victoria once enjoyed are in decline. Declining production from Bass Strait’s big legacy fields has meant Victoria needs to seriously consider and prepare for alternative sources of supply.

Even if the supply of gas from unconventional fields in Queensland was available to the pipeline connecting them with Victoria, Victoria would not be able to supply enough during peak winter gas demand due to the limited capacity of the pipeline. Gas supplies from the North West Shelf are not available to Victoria because there is no pipeline across the Nullarbor.

The tightening outlook for gas supply early next decade has required AGL to seek alternate sources of gas supply to meet the needs of our 1.4 million gas customers.

Re: Why are we exporting gas and then importing gas at the risk of damage to unique wetlands?

So why is AGL continuing to encourage customers to sign up for gas? Wouldn't it make more sense for them to be encouraged to turn to renewable energy, like solar, especially solar hot water which uses most of the gas? If it is not going to be a problem for 10 years than AGL should take the lead and make sure these 1.4 million customers change to other sources of energy instead of risking damage to unique wetlands.

Re: Why are we exporting gas and then importing gas at the risk of damage to unique wetlands?

We encourage people where possible to move towards renewable energy sources. However, this is an expensive move. At a minimum, this would involve individuals replacing all the gas stove tops and gas water heaters in south east Australia. For some of our customers, particularly industries such as power generation and manufacturing, almost financially impossible.

There are also businesses, particularly in Victoria where gas was once cheap and abundant, that rely on gas as a feedstock as well as an energy sources.

When the interim report on the gas industry was recently published, ACCC Chair Rod Sims said:

“Some commercial and industrial gas users have told us that, at these prices, which are two to three times higher than historical prices, their operations are not sustainable in the medium to longer term. They are increasingly likely to relocate from the east coast or close their operations”.

“Gas is a raw material to production or largely irreplaceable source of energy for a diverse range of sectors such as mining, manufacturing, chemicals, agriculture and food production. Rising domestic gas prices are putting gas users which are exposed to global markets under strain, as they cannot pass on the increases in their costs.

“Once large manufacturers relocate or shut down their plants, they won’t come back.”

For us, gas is an enabler of energy transition. Over 80 per cent of electricity produced in Australia is sourced from the combustion of fossil fuels. Given the sheer scale, decarbonising the generation sector is likely to take several decades of replacing the existing generation fleet with low-emissions substitute technology such as solar and windfarms.

To deliver reliable and sustainable energy at the lowest cost possible requires renewable energy from wind and solar combined with more flexible energy sources, like quick-start gas generation, that can be turned on whenever renewables are not available or don’t meet demand. This mix of technologies can replace AGL’s Liddell coal plant when it closes, reducing greenhouse gas emissions by 7.5 million tonnes of CO2 equivalent per annum. Reliable gas supply is a critical component of this replacement plan.

While we undertake this transition, the LNG Import Jetty is still needed to provide a reliable and secure supply of gas for quick-start gas powered electricity generation which, in turn, is needed to enable a cost-effective energy transition to occur, both for AGL, and for the Australian electricity sector.